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Insurance policies covering long term care

Insurance policies covering long term care services are a relatively new form of insurance. The Department has encouraged insurance companies to offer policies covering long term care services and has established minimum standards for four classifications of insurance policies covering such services.

Insurance policies covering long term care services in New York are sold on both an individual and a group basis. Some employers and association groups offer such policies to their employees or members. If you are unable to obtain such a policy through a group, the policies are also sold on an individual basis.

All insurance policies covering long term care services currently being sold in New York State are indemnity policies. Indemnity policies pay a specific dollar amount for each day you spend in a nursing facility or for each home health or home care visit. Some of these policies pay the daily benefit amount regardless of the charges; others will pay covered charges, or a percentage of covered charges up to the daily benefit amount.

Over time, as nursing home and home care charges increase, the daily dollar amounts which are payable under these policies do not increase, however, insurers selling these policies are required at the time of sale to also offer an "inflation protection" benefit. All Partnership approved policies must include an inflation protection benefit of at least 3.5% compounded annually unless the policy is purchased at age 80 or above. A 5% compounded annually inflation protection benefit is also offered unless the Partnership policy is purchased at age 80 or above. This benefit increases the daily benefit amount over time to help keep pace with inflation and increased expenses. Without the "inflation protection" benefit, you will pay more out-of-pocket should you need nursing home care or home care.

Some insurers also offer an option to increase the daily benefit amounts and maximum policy benefit at a future time. Under this option, you have the ability to increase the amounts every specified number of years. Unlike an inflation protection benefit purchased at the same time as the policy, if you opt to increase the daily benefit amounts and maximum policy benefit under this option, your premiums will increase based on your attained age at the time you opt to increase the benefits.

Services covered under these policies can be significantly different among policies. It is very important to read the policies carefully and compare the benefits to determine which policy will best meet your own personal needs.

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